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Following September’s announcement extending the suspension of ‘sleep-in’ shift pay enforcement activity, the Government has sought to bring clarity to the social care sector by launching the Social Care Compliance Scheme (“SSCS”).

From 1st November 2017, social care employers could apply to join the SSCS which gives up to a year, with a 31 December 2018 deadline, to conduct a review and identify amounts owed to workers under the recently clarified National Minimum Wage guidelines. Once employers have submitted their findings to HMRC they have a further 3 months to pay arrears to workers.

Employers already subject to a complaint are encouraged to join the scheme; others have the option to join. While locking employers into a timeline for payment; the scheme offers a respite against normal HMRC enforcement procedures. Employers who do not opt-in, run the risk of incurring fines of up to 200% of amounts owed, naming and shaming and possible prosecution.

Despite this attempt by the Government to clarify the issue around payment for ‘sleep-in’ shifts, great uncertainty remains.

In response to complaints from the sector, including well known charities like Mencap that payment of arrears could mean bankruptcy, the Government has said it is exploring options to minimise impact. This has included opening discussions with the EU to determine whether financial support would fall foul of state aid rules. Vague promises of support are hard to reconcile for businesses being asked to start a timetable to repayment.

While the current clarification has been needed in response to a number of employment tribunal cases over the last few years and the ruling against Mencap earlier this year. National Minimum Wage legislation is still open to interpretation, leading to a likely lack of consistency around how back dated pay amounts will be calculated.

Questions also remain around the practicalities of repaying individuals who are no longer in contact with their former employers, and how long any liability will remain if unclaimed.

The perceived change of historical policy by the Government, lack of clarity around historic NMW application and potential future financial assistance leaves the sector in a continued state of uncertainty.

If you wish to contact us to discuss how this issue may affect a potential corporate finance transaction please do not hesitate to contact Andy Parker on andyp@cooperparry.com or Tom Summers on toms@cooperparry.com of the Cooper Parry Corporate Finance Healthcare team.